Australian shares slipped 0.3 percent on Friday to post their biggest weekly fall since late May on worries about a protracted fiscal stand-off in the United States. Markets have been fretting that the US economy could contract again if no deal is reached in Washington to avoid the "fiscal cliff" - large, automatic budget cuts and tax increases that begin to take effect in the new year.
Banking shares led losses, with Australia and New Zealand Banking Corp dropping 1.6 percent. "We're just seeing a continuation of lingering concerns about the 'fiscal cliff' and perhaps a deal not getting done in time," said Tim Waterer, a senior trader at CMC Markets.
"Whilst selling pressures have abated somewhat today compared to earlier in the week, there is still very much a tendency for traders to get into defensive assets," he said. The benchmark S&P/ASX 200 index slipped 12.5 points to 4,336.8. It fell 2.8 percent for the week and has lost 5.1 percent since marking 15-month highs in October. But higher iron ore prices lent support to some of the miners after China announced its economy is turning the corner and is likely to meet its growth target for the year. Industrial output, exports and retail sales all beat expectations in October.
Rio Tinto Ltd edged up 0.1 percent and Newcrest Mining Ltd jumped 1.1 percent but BHP Billiton Ltd fell 0.6 percent. Whitehaven Coal Ltd lost 1.8 percent after the company announced a decision to scale back its business development unit and Brisbane presence. Some defensives gained, with supermarket retailer Wesfarmers Ltd and blood products maker CSL Ltd both gaining 0.6 percent. New Zealand's benchmark NZX 50 index slipped 3.7 points to 3,947.8.